Winkie wrote:
Roppongi
I think that some of the facts you base your oppinion on are maybe not correct.
Really? Someone tends to agree with me ...
Can't really compare Bangkok and HH as the supply of land is limited in Bangkok but in sleepy HH that is not the case.
Pattaya mirrors the way HH is going. Endless property development has resulted in a huge oversupply of places up for rent. In the place I stayed at past the Hyatt a few months back they were asking 16 million baht for a three-story 4 bedroom town house that was showing its age. The long-term resident next door to us was paying 10,000 baht a month rent so you'd be waiting a long time to get a return on your investment.
Do you honestly think that Hua Hin has the general infrastructure to justify some of these pie in the sky prices that developers are quoting?
Negative mood could take some time to lift
Bangkok Post: 16 January 2007
By: NINA SUEBSUKCHAROEN
The alarming wave of bombings in Bangkok has led to a negative mood in the property market, with the general consensus being to adopt a wait-and-see attitude, says Dan Tantisunthorn, senior manager for research with Jones Lang LaSalle.
The real estate market was already jittery about the impact on foreign investment of the Bank of Thailand's capital-control measures announced two weeks before the New Year's Eve blasts, he said.
One reason for concern is that foreign participation in Thailand's property market has spread to almost every sector, from offices, which are probably the most healthy right now, to resorts and condominiums, said Mr Dan.
While the legal means by which foreigners acquire some types of property are open to debate, at least in the case of condos the law has always been easy to understand: foreigners can purchase up to 49% of the units in any given building.
However, Mr Dan noted that in a large number of buildings foreigners only buy a maximum 10% of the units available, since ultimately the sustainability of the condo sector depends on people moving in and occupying the spaces they have bought, be they locals or foreigners.
He observed, though, that the rise in tensions has concentrated foreigners' minds on something that hadn't been as big a concern in the past _ will they be able to sell their properties in the future?
He said the mood today differed from the start of the up cycle that began in 2003, after no buildings had been completed during over the preceding four years. At that point, it made sense to get into the market on a price-appreciation basis.
"At this point I think people, whether they own or are still looking to buy, are taking a lot harder look toward the reality of the returns that they will make going forward."
Dan: Foreigners have lots of options
Even so, it's difficult to say whether people will start selling in five to six months' time should the political situation deteriorate. Mr Dan said that in the past it was not just individual choice that triggered sell-offs, since problems in the financial system were a major contributing factor.
"I don't think individuals have any sort of cash or liquidity problems where they would necessarily need to liquidate this type of asset, and I think the behaviour in general has been that people are willing to hold the asset without actually realising a return, in the hope that the market eventually rationalises and demand will catch up with supply."
Those hoping for price cuts in new developments might be disappointed, though. Mr Dan drew attention to the fact that most luxury developers have been pretty successful in the recent past and although this segment became saturated, prices continued to rise. Higher land values were one factor.
However, there is a bit of uncertainty about getting tenants and it might take some time for investors to understand where the demand is going to come from.
"I don't think that at the luxury end of the market, developers will be rushing in to test the waters beyond what they have already," says Mr Dan.
Another important issue is that the condo market is tilting toward an excess of supply rather than remaining balanced. "There is nothing urgent at this point but maybe some of the expectations of investors need to be adjusted _ for them to actually get people to occupy the spaces that they are offering right now."
Jones Lang LaSalle has noted that booking deposits are being forfeited in some projects with buyers choosing to not take transfers of units. "This is not on a wide scale at this point but we have noticed it."
Mr Dan added that such signs generally appear first in the luxury market.
Where moderately priced condominiums along the skytrain and underground routes are concerned, Mr Dan said JLL had not analysed its data on the segment, but early indications are that it is getting quite saturated as well.
Meanwhile, foreigners who liquidate real estate holdings in Thailand have other attractive regional destinations to invest in. Mr Dan mentions Vietnam, which is just starting to become competitive.
"Look at the big neighbour to the north _ China. The better the outlook of the economy of any given country, I think the more attractive it becomes in general whether that be for investors in manufacturing, services or property."
From the regional perspective, prices in Thailand remain pretty cheap per square metre. JLL's research shows that Thai prices are on par with those in Beijing but half those in Shanghai. Hong Kong is significantly higher _ around eight times more than Thailand, while Singapore is three times more costly. However, Kuala Lumpur is a little cheaper than Bangkok.
Where yields are concerned, luxury developments in Bangkok are paying around 5.5% per year against 3% in Hong Kong and 4.5% in Singapore. Regionally, Jakarta stands out at 11%.
"Yields are also quite high in Shanghai and Beijing, nearly 9%, but again there is probably more risk to those markets than Hong Kong and Singapore where the residential market at the luxury end is more developed."
The concerns were more about the political and economic future of the country and its impacts on the foreigners that decide to live and invest here. A subject that gets repeatedly brushed aside by people that have a vested interest in real estate.